Twitter: Users Up, Revenue Down, Staff Reduced 9%

Twitter on Thursday managed to beat analysts’ third-quarter earnings expectations. It reported that average monthly active users were up 3% to 317 million. But the good news ended there.

Revenue rose about 8% to $616 million -- less than the 20% growth reported by the social giant a quarter earlier, and far less than the 58% growth seen during the third quarter of 2015.

Worse yet, Twitter said it plans to reduce its global workforce by about 9% -- which amounts to roughly 300 employees -- and restructure the company accordingly.

The restructuring will focus mainly on reorganizing Twitter's sales, partnerships and marketing efforts, CEO Jack Dorsey said Thursday.

“Our strategy is directly driving growth in audience and engagement, with an acceleration in year- over-year growth for daily active usage, Tweet impressions, and time spent for the second consecutive quarter,” Dorsey stated.

“We see a significant opportunity to increase growth as we continue to improve the core service,” according to Dorsey. “We have a clear plan, and we’re making the necessary changes to ensure Twitter is positioned for long-term growth.”

Analysts on Thursday took Dorsey’s words with a grain of salt.

“I'm cautiously optimistic about [Twitter’s] prospects if they do focus on core products and curbing abuse which should both attract and retain users and set up the platform to monetize -- potentially in new ways,” said Melissa Parrish, an analyst at Forrester Research.

Anthony Noto, Twitter’s CFO, promised the company would become more disciplined about how it focuses on various efforts. “We intend to fully invest in our highest priorities and are de-prioritizing certain initiatives and simplifying how we operate in other areas,” Noto stated.

Among other shifts, Twitter announced plans to shutter Vine on Thursday.

Twitter estimates that it will incur about $10 million to $20 million of cash expenditures as a result of the restructuring -- most of which are severance costs -- and $5 million to $10 million of non-cash expenditures, consisting mostly of stock-based compensation expenses.

Of course, this is not the first sign of trouble for Twitter. Recently, data emerged showing that ad agencies are increasingly bypassing the platform in favor other social networks, especially Instagram.

Twitter was also recently forced to slash its second-quarter revenue guidance to $590 million -- from $610 million -- nowhere near analyst expectations of $678 million.

eMarketer also recently released a forecast suggesting that Snapchat will overtake Twitter in terms of domestic users before the end of the year.

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